When a Firm Has a Real Option to Invest in the Future,it

question 49

Multiple Choice

When a firm has a real option to invest in the future,it is known as a ________.Because these options have value,they contribute to the value of any firm that has ________ investment opportunities.

• A) growth option; future possible
• B) delayed option; future possible
• C) abandonment option; present possible
• D) financial option; present possible

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Definitions:

Uncertainty of Demand

The unpredictability associated with the future demand for a product or service, making planning and forecasting challenging.

Flexible Production Capacity

The ability of a manufacturing process to adapt and respond to changes in demand by varying the amount of products produced without sacrificing efficiency or incurring significant costs.

Price

The amount of money required to purchase a product or service.

Risk Mitigation Strategies

Methods or plans implemented to reduce the likelihood or impact of potential threats to a business or project.